Skip to main content

tv   Mad Money  CNBC  February 13, 2012 11:00pm-12:00am EST

11:00 pm
carrillo saying good night from madison square garden. good night, martha stewart and her chow. the dalmatian came through. good n i'm jim cramer and welcome to my world. >> you need to get in the game. >> firms are going to go out of business and he's nuts! they're nuts! they know nothing! >> i always like to say there's a bull market somewhere. >> "mad money" you can't afford to miss it. >> hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i'm trying to save you money. my job is not just to entertain you, but to educate you. call me at 1-800-743-cnbc. just because a story is big news, that doesn't necessarily mean it's important, big news to the stock market. on any given day when the dow surged 73 points,the s&p gained .6%. the nasdaq rose .95%.
11:01 pm
it feels like we want to comingle so much news with the market that it's enough to make your head spin. just today i heard many people tell me that this market must trade on the budget submitted by president obama. i heard this document which includes tax increases for the wealthy should be the centerpiece of what happens next in the stock market and that means, of course, that the stock market should head lower. at the same time i heard the debate about the trillion dollar deficits and how hard it would be for the united states. that should be the controlling factor. that should be the be all and end all of stocks. what happens if the deficit goes from out of control to totally apocalyptic? don't we have to sell stocks now just on that specter? >> sell, sell, sell, sell. then i heard the obligatory chatter because of the european dominos. the unruly collapse that would bring down portugal and ireland and therefore create a shock to
11:02 pm
the system that would send you into a global tailspin. if we allow the bush tax cuts to expire at the same time that we cut more than $1 trillion in spending, it could trigger a brand new recession here, one that could happen easily because of the fragile nature of the recovery. you want to be in stocks if that happens? of course, the debate over obama care and the catholic charities called into question exactly how meaningful obama care will be and how much it will cost employers beginning next year and how the economy can't afford such a body blow because it makes hiring more costly. by the way, that is something i believe to be true. oh, and with israeli embassies being targeted by some sinister force, coupled with the ticking time bomb that is iran's nuclear program, how could you want to own stocks? do you really want to be in the s&p knowing that this looms in the horizon?
11:03 pm
you want to own stocks with iran blockading the straits of hormuz? look, okay. these are all reasons to sell the market. that's right. if you only view the stock market as the asset class and the asset class of gold or real estate and you consider all these painful choices and how -- that can pretty much derail anything good. so i understand why you would want to go into cash tomorrow. i heard a guest on cnbc say it's time for a risk-off approach to the market because of all of these problems and a few others, to which i say thanks for nothing. that risk on, risk off nonsense is so 2011, when the hedge funds and high frequency traders ruled the roost. the whole nomenclature of risk on and risk off is a false one. it is purely bogus. something that a lot of quants must have sat on trading desks that somehow seeped into the media parlance by people who wanted to sound cool, but people
11:04 pm
who wanted to sound like they knew how the professionals talk. me? it means nothing to me, and if it means nothing to me after 32 years of running money it should mean nothing to you, too. what is the real issue? it depends on the stocks that might not be impacted and affected by these exogenous events. i can tell you that the only time i cared about so-called macro news could be counted on one hand. that's right. as i like to say on the trading desk, what does budget deficit have to do with the price to earnings multiple of bristol-myers? in other words, these bearish news stories should have more of an impact cerebrally, right? than they do. they should seep into our consciousness and make us more nervous, but they don't. it's just not what happens. for many stocks the news doesn't register. these stories don't impact the price of apple. they can't match against pfizer
11:05 pm
or be calculated against microsoft or even the closing prices of red-hot stocks like cummins or caterpillar. am i saying these big-picture negatives mean nothing? no, i'm not stupid or glib like that. as i told you last week i want to see what the germans do with the deals the greeks have this weekend. a disorderly default and unruly, disorderly in greece would be negative. we have to figure out what happens to the euro as the euro deeply impacts the companies from the conference calls we've gone through. as i said over and over, if earnings get cut, stocks do go lower, but the bigger issue is what happens if germany embraces greece and at the same time china cuts interest rates. next thing you know, you've got yourself a monster rally while you're sitting there worried about the budget deficit. let's take the budget deficit. it's real. if we're being serious and if we believe a balanced budget is important, then both entitlements have to be cut and
11:06 pm
taxes have to go up. it's true. a lot of people won't agree to that, but here's the thing. interest rates remain so low that they're almost non-existent. those were rocky times for stocks. the competition was pretty darn fierce. treasuries yielding 3%, please! until they move up, when the bond vigilantes are done wrecking europe, it's just not palatable to own bonds versus higher yielding stocks, even if obama is able to raise taxes big on dividend income, and remember, i don't think it will get passed. gasoline at eight bucks. terrible, just terrible. why not? because if israel doesn't attack iran, fund managers feel they'll miss out on this magnificent rally and they'll fall further behind on those that are less worried. the guy worried about this stuff
11:07 pm
is making more money than the guy who is worried about this stuff. why don't you file it under i stay long until exogenous events and if i am i will buy more stocks because so many of my companies are doing so well and yet stocks are historically cheap including many of my favorites. that's the line of the winning fund manager right now. here's the bottom line. we aren't whistling past the graveyard here. we are simply not at the juncture where bonds represent serious competition to stocks yet, or we haven't seen the bad news yet on the tape. until we do, we can't figure out how these potential negatives factor into the stocks we like. i know it's our job to predict what will happen if certain events do occur. we do know the correlation is to individual stocks and look at these individual stocks, we can't fathom or see the impact on many of the stocks we like on these events. we can't sell darden because we think red lobster will be hurt
11:08 pm
iran strikes the strait of hormuz, and selling bristol-myers with this 4.2% yield and strong earnings momentum simply because of the budget deficit? enough already. that's just plain nuts. let's go to ron in new jersey, please. ron? >> big barnegat boo-yah to you, jim. >> nice local boo-yah back at you. what's up? >> i'm new to the stock market. i invested in ram energy. they had a purchase agreement with hk, 3-1 reverse stock split. should i go fishing or bail? >> no, no, no, no. i like that. you've got some great blood lines here in this company, too. guys who have been real, real winners. i want you to stay on it, and i think that ram was a very valuable company that built companies before. i think you're in good shape owning that. i want you to hold on. just so we know, they changed the symbol. remember they sold that? it used to be hk. i forget exactly which one.
11:09 pm
i know that hk is back and this version of it looks pretty darn good. hk. let's go to frank in new york, please. frank? >> caller: boo-yah, jim! >> boo-yah, frank, what's up? >> caller: i'd like to know your opinion on capital one if the fed does approve the deal with ing. >> i happen to have loved ing's business, the ing direct business is so fabulous. this would be fantastic for capital one. as it is, capital one is a pretty darn good company right now, but that would make it so it gets a premium multiple over all other bank and tech stocks, bank tech stocks, except for visa and mastercard. that's why it was tech. we can't predict the future, but we can't be captive to it, either. how do we react to the uncertainty? sorry. it's no longer how the stock market reacts. it's individual stocks and many of them will react positively or
11:10 pm
not react at all. "mad money" will be right back. coming up, old dog new tricks? this tech icon was once a wall street darling, but with the antiquated direct sales model it's no longer leader of the pack. could its new tricks convince jim to throw this dog a bone? find out next. and later, best in show. could man's best friend soon become investor's best friend? cramer's sniffing around to find the best pet stocks that could give your portfolio a treat. plus, fuel up? this controversial energy stock is already up 30% in the past six months. could that be just the beginning? cramer's drilling for answers in his exclusive with the ceo of magnum hunter resources, just ahead. all coming up on "mad money." miss out on some "mad money?" get your "mad money" text alert today.
11:11 pm
text "mm" to 26221 to get cramer right on your phone. for more info visit or give us a call at 800-743-cnbc.
11:12 pm
11:13 pm
11:14 pm
♪ how much is that doggie in the window ♪ >> while we're watching these fancy pure breds prance around at the westminster dog show, i think it's worth pointing out that when it comes to investing in stocks, sometimes old dogs can, in fact, learn new tricks. that might not be true in the animal kingdom, but in the corporate world it happens all the time. consider the ultimate old dog of tech, dell. a couple of years ago, if you asked me what i thought of dell's future, i would have said this personal computer maker was way past its prime, that it was a diseased animal that needed to be put to sleep before it did any more damage to its shareholders' portfolios. dell, one of the most innovative companies in tech seemed to be
11:15 pm
hostage to a moribund pc market with no way ought. even when the company's founder michael dell came out of retirement to run the business once again it seemed like there was nothing he could do to get back on track, which is why i put him on the wall of shame in july 2010. this old dog learned a few new tricks and now i believe dell is one of the hottest turnaround stories in tech. that's why i took michael dell off the wall of shame last may when his company reported a terrific quarter and it became clear that dell had, in fact, figured out a way to diversify away from the ailing pc business. since then it's become everer clearer and that's why tonight i'm pounding the table, telling you to buy the miraculous comeback story that is dell. so what's changed? how has dell managed to pull off such a remarkable transformation to extend the canine analogy, dell was in the pound in one of the shelters where they euthanize the animals if nobody wants to adopt them. the consensus was that dell should be put out of its misery, but now i'm saying you should
11:16 pm
take this old dog with you because it could be your portfolio's best friend. let me explain what's happening here. the problem with dell was always that this was a pc company and it was in secular decline. now dell gets half of its sales from laptops and desktops and those sales are not growing, but the company has radically cut costs in the pc biz making it more profitable. remember the glory days of the personal computer? dell built itself into a powerhouse by allowing people to customize their own machines. however, that's a very expensive business model and now that the pcs are no longer where the action is, dell abandoned it. reduced the number of pcs it sells, something that a lot of them slashed manufacturing costs by 30% and also simplified the supply chain and that saves a lot of money. the analysts on wall street under underestimate how important these cost-cuts have been. they expand by 400 basis points and analysts say that comes from
11:17 pm
lower component costs when they can generate huge savings from abandoning the old custom building strategy. in other words, dell has made peace with the fact that pc is no longer a growth business and they're trying to milk that for profits. that's a nice change, but the real comeback is happening in the other half of the company, the enterprise business. two years ago dell announced a big, strategic transformation. in order to provide its business customers with full end to end solutions, including storage, networking, software, dell relied third-party vendors like brocade and microsoft. dell always had a strong enterprise customer basis, but a lot of what they were selling was made by other companies and these third party products carried tiny 2% gross margins. for everything but servers dell was nothing more than a middleman. the company decided to develop its own storage products and its own networking solutions and now
11:18 pm
they reached the point where their enterprise businesses are wholly owned. it was by dell not by enc where the relationship is now over. they are selling networking gear made by dell and not just by cisco, and that makes a huge difference to the bottom line. to get to this point the company had to make a bunch of acquisitions, some of which were panned at the time, and when you look at the owner trying to own its own enterprise portfolio, they make a ton of sense. dell's made 17 acquisitions designed to reduce their dependence on low-margin resale relationships with the likes of microsoft and cisco. it was quarterbacked by a guy named dave johnson and he was central to ibm's incredible transformation for more than a decade. it's been working and dell's been a brilliant buyer of new technologies and therefore knows how to anticipate these customers' needs. altogether, these acquisitions have helped dell with the free cash flow and it has surged by
11:19 pm
80% plus the company built up its sales force and some of it that helped take share from the competition. i think the results speak for themselves. time to let dell out of the doghouse. that's right. ever since i took michael dell off the wall of shame, we've seen that the company can execute the new strategy. dell missed when it reported the latest quarter in november and the 47-cent basis reflecting the company's shift toward higher value-added products and the enterprise revenues were up 8%. dell reports in a little more than a week, ago? february 21st. and i think the results will be excellent. meanwhile, think about it, the stock sells for 8.7 times forward earnings and that's a ridiculously low multiple. 5% growth rate could accelerate and i think the stock's pretty cheap, given that dell has $7 billion in cash in the balance sheet and a massive buyback that's equivalent to 22% of the company's market cap.
11:20 pm
that's the kind of buyback that's big enough to matter. the turnaround at dell proves that even an old dog can learn new tricks. i think the stock's a buy. even as mere nickels and dimes away from the 52-week high. i would like it more on a pullback, but maybe you'll get one if it sells off after the quarter. after the break i'll try to save you even more money. stay with cramer. ♪ ♪
11:21 pm
laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] now there's a mileage card that offers special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret?
11:22 pm
♪ [ male announcer ] the new united mileageplus explorer card. get it and you're in. try bayer advanced aspirin. it's not the bayer aspirin you know. it's different.'s been re-engineered with micro-particles. second, it enters the bloodstream fast, and rushes relief to the site of your tough pain. the best part? it's proven to relieve pain twice as fast as before. bayer advanced aspirin. test how fast it works for you. love it, or get your money back.
11:23 pm
♪ ♪ ♪ and they called it puppy love ♪ you know us. we're always on the hunt for big picture themes on "mad money." long-term trends that can inspire multi-year bull markets. sometimes searching for themes
11:24 pm
could be looking for a needle in a hay stack, but there are other times when great ideas look you straight in the face and then they bite your nose off. take the westminster kennel club dog show on tv today. the ratings for this thing are going to be totally in your face and a great example of just how much americans love their dogs and not just dogs either, frankly. as a country, we're obsessed with our pets and now the economy is accelerating and people have money in their pockets to spend again and they can get a new chew toy or better food for man's best friend. so tonight in honor of the -- in honor of the westminster dog show and an homage to best in show, the cramer fave christopher guest movie, not
11:25 pm
as good as as waiting for guffman or spinal tap, "mad money" is going right to the dogs, and that could be your portfolio's best friend. the next time somebody asked you who let the dogs out? you tell them it was cramer. the fact is to totally confuse our animal metaphors we have a raging bull market in all things pet-related in this country. 62% of american households own a pet. that's equivalent to 71 million homes, 94 million cats. 78 million dogs. and man, do we love to pamper our pets. where are you going there, wise guy? in 2010 -- get back here. in 2010 -- answers to me. the pet products and supplies business was a $35 billion market and it's only grown larger since then. when you throw in boarding and am grooming services the total pet business is worth 48 billion being smackers. that's a huge chunk of chain and it's growing larger every year. but that's not the only reason to leash your portfolio to a pet
11:26 pm
stock. after years when pet adoptions were on the decline thanks to weak household formation, over the last couple of quarters adoptions have begun growing again, and then there's the demographic factor. as ever more baby boomers send their kids off to college, we have an entire population of parents with no children to take care of. exactly the kind of people who lavish their pets with tons of attention. not to mention buying them all sorts of fancy food. i would even go so far as to say that a lot of people in this country love their pets more than their kids. rebellious periods. after all, dogs are more affectionate than the average teenager and cats never talk back except for the occasional scratch at the face and they give you horrible allergies. where is he? where is he? all right. all right.
11:27 pm
don't ever upstage the talent! how do we try to make money off the pet bull market? i have a terrific way to play it. it's called petsmart. petm. i need some treats! the largest retailer of pet food and pet supplies in the united states with more than 1200 stores in the united states and canada. they are, dare i say it, best of breed, with 14% to 15% share of the over $40 billion pet industry, but petsmart's more than just a place where you buy a leash for your dog or food for your cat or guinea pig or a small pet for your kid. they're not just a retailer. petsmart figured out a formula that allowed them to fend off on-line competition. they're like the whole foods of pet stores. what makes petsmart different? this company realized that the
11:28 pm
obsession with healthy foods is going well beyond humans. they also want their pets to have an organic diet, too, which is why petsmart has had enormous success selling super premium food. it's the fastest growing category with margins that are three times the size of ordinary pet food. so each sale is much more profitable. they've been very savvy about bringing themselves as a higher end pet store. only 10% of the product petsmart carries are even available in the mass channel. in other words, this company's selling lots of exclusive and proprietary products. they even have exclusive martha stewart branded and doggie bed and they have toys "r" us branded toys. you wouldn't think it's the martha stewart model, it's their owners. more proof that people that would pay up to buy what they perceive for their pets and the best is only available at petsmart. this month the company plans to give high-margin natural goods 20 additional feet of selling
11:29 pm
space in the dog aisle and eight more feet in the cat food aisle, something that should give them a nice boost given how popular the stuff is. if i still owned my cat don julio tequila, i know -- three first names i know i would be cranking up the lock street rather than the can to feed the little guy. alas, he's moved on to another house and changed his name, even though he was blanco in coloration with an anejo pedigree. they sell exclusive, expensive, fancy shymanskiy stuff for your pet, but they keep services that keep people coming back and back to the store. this is how they've been able to fend off competition from the web. you have to go to the store to
11:30 pm
get your dog groomed and once you're there you may as well buy stuff, too. they're opening up a chain of doggie hotels all over america. last quarter they had four bringing the total to 189 pet hotels and it's been incredibly successful with same-store sales growth in double digits over the last two quarters and profitability likely to ramp with call center, online-booking over the next year or two. what's next? what if the dogs can weigh in on trip adviser about the amenities and the five-star question, can they take the soap shampoos and bathrobes home with them? with plans to open an additional 450 locations in north america. and the latest quarter, it was terrific! admittedly, the stock ran up $1.52 to a new 52-week high today. i was furious because many people had the same idea i did with the westminster dog show and petsmart has given up a -- given us a 77% gain since i got behind it in march 2010, but
11:31 pm
with the stock selling for 18 times forward earnings with a 16% growth rate it's not particularly expensive given the growth prospects. however, we hate chasing on mad money which is why you have to wait for a pullback. there is a good chance it slips right back again and that will be your opportunity to pull the trigger. the bottom line, if you're looking for a way to play the booming bull market in pets, look no further than petsmart. the company that has become the mcdonald's for cats and dogs, maybe that's not such a good analogy. how about the whole foods and four seasons with macy's for good measure? let's take calls. let's go to p.t. in colorado. p.t.! >> caller: hey, jim, it's big, rocky mountain national park boo-yah to you! >> same! what's going on? >> caller: well, jim, at&t is one of the best stocks in 2012,
11:32 pm
but it's an issue that's an outrageous for times out of verizon. which one of the dogs on the dow should i take for a walk and which one is going back in the kennel? >> okay. my charitable trust has been buying at&t, why? because these things go back and forth and back and forth. right now at&t is cheaper on a yield basis and they both have similar growth patterns, although some people think verizon is growing faster. i think at&t is in a better position right now because the stock is lower, not because it's a better company. let's go to harry in california, please. harry! >> caller: boo-yah from vista, california. >> what's going on there, partner? >> caller: my question is i'm considering buying merck or johnson & johnson for their dividend yield and i plan to hold them for 18 months. merck has a higher yield with 4.4% versus johnson & johnson
11:33 pm
and has a higher payout ratio paying out 84% versus 65% for j & j. my question is j & j likely to raise the dividend and can merck sustain theirs? >> merck or j & j? what are you thinking? i think you like merck more. shoot. there you go. these are both high-quality companies and we actually did a couple of pieces about big pharma and you asked me about dividend boosts. merck just gave you one. j & j can certainly give you more. i don't think you can go wrong with either one. may i say that merck is more undervalued? they like j & j because it has over the counter products. i think merck is cheaper and they'll unlock more value and i do like a 4.41 yield more than a 3.5. i want to go to cosmee in illinois. >> caller: hey, jim, boo-yah! >> boo-yah! >> caller: i'm looking at the dog of the dow, intel. since last year the stock was rising steadily until january 25th of this year it's stayed
11:34 pm
between 24 and 26. what do you think will happen with the stock in the future? >> which one of you dogs is named intel? they all looked up and they all answered to intel. here's the deal with intel. i think it is one of the most undervalued companies. why? because i don't think people are give credit for its initiatives when it comes to wireless. i think intel with a 3% yield and a fantastic balance sheet is a terrific buy. i want to own it, and i would stick with it, too. you don't need to trade intel. you could call petsmart a teacher's pet because i'm giving it an a-plus. just like the dogs, it could be your portfolio's best friend. >> buy, buy, buy! >> stay with cramer! coming up, fuel up. this controversial energy stock is already up 30% in the past six months. could that be just the beginning?
11:35 pm
cramer's drilling for answers in his exclusive with the ceo of magnum hunter resources just ahead. this new at&t 4g lte is fast. hey. did you guys hear... ...that mary got engaged? that's so 42 seconds ago. thanks for the flowers guys. [ both ] you're welcome. oooh are you guys signing up for the free massage? [ both ] so 32 seconds ago. hey guys you hear frank's cat is sick? yeah, we heard. wanna sign the card? did you know the guys from china are in the office... [ speaking chinese ] [ male announcer ] stay a step ahead with the 4g lte galaxy s ii skyrocket. only from at&t. ♪
11:36 pm
11:37 pm
11:38 pm
it is time -- it is time for the lightning round on "mad money." >> buy, buy, buy! >> sell, sell, sell! >> play until we hear this sound and then the lightning round is over. are you ready, skee-daddy? let's start with dave in new york. >> caller: boo-yah from frankfurt, new york. >> i love it there. what's on your mind. >> caller: taiwan semiconductor. >> inexpensive. i like the stock. let's go to larry in california. larry! >> caller: boo-yah, cramer. >> boo-yah. >> caller: this is larry from rancho mirage, the land that has almost as many golf courses. >> bob hope was there for the national field hockey festival with my daughter. what's up? >> caller: my wife and i are both retired teachers and we watch your program religiously and make financial decisions together. what about px?
11:39 pm
>> i have to send you to air gas because peter is doing a dynamite job there. i prefer air gas over praxair. let's go to andrew in new york. andrew! >> caller: boo-yah, man, from jamaica, new york. my stock is quest corp pharmaceuticals. >> you are too much, my friend. all right. quest corps. you know what? i have a fair on this questcor and i will not opine until i reach a conclusion. i have to have one love on that one, my friend. >> let's go to sammy in louisiana. >> caller: boo-yah, jim. >> booyeah. >> caller: you're the greatest. >> building momentum on the 110 level. let's go to chuck in california. chuck! >> caller: happy birthday to you, buddy. >> thank you, partner. >> caller: listen, about sprint and another company called shazam and wondering how -- >> i don't know.
11:40 pm
shazam, solomon and hercules. i want to focus on sprint and here is the deal with sprint. you don't want to own the common stock. there are layers and layers of bonds. i'm not going to recommend any of them. let's go to steve in new york. >> caller: this is steve in far rockaway. boo-yah to you. >> same. >> caller: my stock is southern copper. >> i did not think they cut the dividend yet. i still think it's a great situation. i like copper very much. the stock goes higher and i'm not backing away from southern scco, and that, ladies and gentlemen, is the conclusion of the lightning round!
11:41 pm
11:42 pm
11:43 pm
>> here on "mad money" we're always looking for ways to play the big picture themes. the rise of oil coupled with the oil drilling boom in the united states. that's why tonight i want to introduce you to a new way to speculate on america's incredible surge in oil production. ladies and gentlemen, meet magnum hunter resources! mhr for you home gamers not to be confused with magnum force.
11:44 pm
although that sounds like the next clint eastwood flick. it's not hunting down criminals or selling chryslers. it's a $6 and change stock with an $820 million market cap. you have to be careful because this one can fly. the company has positions in the bakken, eagleford in texas and it's also got a little marcellus action and the two biggest domestic oil discoveries since prudhoe bay in the 1960s when you're talking about eagleford. magnum's reserves are about 51% oil and 49% natural gas and it's becoming more and more oily by the day, as it drills in the bakken and eagle ford. it's still restrained by the super low natural gas. you want to be in the lowest cost like marcellus shale, having marcellus exposure is kind of like graduating as valedictorian from springfield
11:45 pm
community college and that's homer simpson's alma mater. it's growing reserves like crazy. the company reported two weeks ago at the end of january. they delivered a massive 455% increase in production. it went up 44%, a huge increase, it's an efficient drilling factory where there is lots of acreage. it's a great plan and it's still down 3% which means there can be upside if the company can keep executing. let's talk to gary evans, a famous oil man, chairman and ceo of magnum hunter resources to find out more about the rapidly growing company and where it's headed. all right. all right. mr. evans, it is a pleasure to have you on the show. first, i've got to ask you. among these three, bakken, eagleford, marcellus, where is the greatest opportunity for magnum hunter? >> if you look at today's
11:46 pm
commodity prices you've obviously seen the oil sector as you so wisely indicated. the bakken in north dakota and eagleford are where we are in 2012. >> do you think the company gets enough credit, given that year over year numbers this was the greatest growth of any oil company that i find? how do i tell the story correctly, but the analysts, all they want to talk about is a funding gap that doesn't exist. why don't they get it? >> underpromise and overperform, that's our motto and so we began 2011 at 2,750 barrels of oil for the day. we ended the year at over 13,000 barrels a day. today we're over 14,000 barrels a day. to put that in perspective, brigham exploration, i know that's a company you followed for a long time, sold out at 16,000 -- not even 16,000 barrels a day for $4.2 billion. our market cap's $850 million. so there's a huge disparity there.
11:47 pm
>> that's where i was going because brigham is a company i didn't like as much as magnum and when brigham got that bid i said i have to redo every bit of my thinking because your properties, i think, are in better places and you are not constrained by just being in one area, but i think your eagleford is every bit as good as what eog has, which is what we were highlighting. eog completely surrounds us. i was looking at possibly monetizing our eagleford back in november/december and our success has been so great, i pulled it back off the market. you hear about transactions happening at 20,000, 25,000 an acre. i think it would be north of 30,000 net acres. that's more than our marketization, 1500, and i have four rigs running down there and it's a great, great resource. >> in the conference call and
11:48 pm
presentations, you talk about doing a master limited partnership because your company is humming right now. why do an mlp? >> we have a midstream asset called eureka hunter pipeline and it's a brand new system that we built in west virginia and ohio. it will move 200 million to 300 million a day. we built that because there was no infrastructure for high-pressure gas in that part of the world. it was a low pressure regime for the last 50 years. we're moving 75 million a day through and that's our own company gas, our own marcellus gas, but the market will value that at 10, 12, 13 times multiple and it's now got its own life. so with that, you'll see some more acquisitions in that arena. we have our own financing, so we're not trying to take any money away from the upstream opportunities that we have and put them in the midstream. so that's the idea of rolling it out as benefit to our shareholders. >> one of our favorite recommendations was a company called simarex.
11:49 pm
were you just minding your business and growing and growing and someone called you, it was not for sale, right? you just got tapped? is that what you envisioned with magnum hunter? >> actually, simarex. magnum hunter one was a company i started when i was 27 years old and that was a 20-year period of my life. and that period of building a gas company was when we were buying from the major oil companies and all of them were leaving the united states and going overseas and you couldn't make a buck in the united states. we built our company strictly on acquisitions. simarex had no oil properties and we were the only company in oklahoma and arkansas and we sold out. as a 20-year period it was time to monetize and do something different and of course, when the drop in commodity prices happened in '08, that's when i got back into business. so this time around, now that my
11:50 pm
competitors are the major oil companies and they've all come back to the united states and i'm dealing with exxon as competitors in the building. >> so another simarex phone call could happen? >> we positioned the company to be very attractive for a take-out. we've got two to three weeks with this company and i sold out at 20 bucks a share and we're a long way from 20 bucks a share. >> i am thrilled you came on the show. gary is chairman and ceo of magnum hunter resources, mhr, thank you so much for coming on the show. >> thanks, jim. >> okay. mhr is one of those stocks that is, i'm putting it on your speculative list, okay? because when oil comes down a couple of bucks, this one drops a dollar and that's when you have to pounce. stay with cramer.
11:51 pm
11:52 pm
11:53 pm
listen, apple is all about earnings. with you get a rally that puts a stock, any stock up more than 20% year to date without a takeover, you have to recognize that that's earnings talking. there has been plenty of talk with apple with its $469 billion market cap has become its own personal bubble and i understand that. you have to be nervous that apple has had a parabolic run here, but the problem with dissing apple here and dismissing the run is that it's based on upward earnings revisions that are so great it's difficult to understand why
11:54 pm
apple isn't even higher already. we had a ton of stocks that gapped up this year. i count 20 stocks that were hand delivered every weekend, showing a price that's dramatically higher than the previous day's close, why? because it announced a gigantic earnings surprise and the stock skips points all of the way where it has to go. the stocks are too low versus the rest of the market given the new earnings momentum and the low price to earnings multiple versus the cohort and the rest of the market. almost every single stock that blew away the number his this kind of huge leap. we got the stock to where it was valued versus the rest of the market. almost every single stock except apple. apple should have had one of those moves when it became clear that apple had much more earnings power than we thought, something self-evident, the stock should have skipped multiple levels and it should have cut to $550.
11:55 pm
simple, because if $55 earnings per share estimate could be justified after that quarter and at a minimum, yet because there are so many shares and because there's a ton of skepticism, the stock didn't trade right to where you could have expected it to run, especially when it was clear from the conference call that there was an acceleration in iphone sales as the quarter wrapped up. keep in mind, i'm not playing the back out the cash game. yes, apple is 100 million in cash, and therefore selling for less than eight times earnings. apple is moving to its correct price versus the rest of the market and it's blowing through level after level that should have been blown through the night after the company reported. it should have just been there by the next day. of course, we can't pick a place about any stock, even as apple has a lot of things going the right way. there's a huge amount of iphone sales coming this quarter and
11:56 pm
introduction of the ipad 3 this spring. we always worry that the market might take a tumble and that the ipad 3 rumors prove false. nevertheless, if there was an ordinary stock apple would have the fare value amount 550 immediately versus the rest of the market the moment it reported. rather than taking its good old time getting there, at least when it comes to the other earnings surprises out there. it's slow to react! stick with cramer!
11:57 pm
line dating st kind of expensive. so to save-money, i found a new way to get my profile out there. check me out. everybody says i've got a friendly disposition and they love my spinach dip. 5 foot ten. still doing a little exploring... on it. my sign is sagittarius, i'm into spanish cheese, my hairline is receding but i'm getting a weave. (falsetto chorus) getting a weave. who wants some ronald tonight!? geico. fifteen minutes could save you fifteen percent or more.
11:58 pm
one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face. [ gasps ] ♪ [ male announcer ] get a retirement plan that works at e-trade.
11:59 pm
please keep in mind that when most stocks blow the numbers away they gap up. apple didn't gap up. it should have and it will be higher than where it is. magnum hunter, if you guys go pay seven for that, you're crazy. it will go back to six or even lower, but i do like the story. if you get way too excited about these single-digit stocks, i'm urging caution, okay? i like to y


info Stream Only

Uploaded by TV Archive on